Is your ERP system dead or alive?

Back in the late 1990s, client-server was the standard in computing. ERP applications running on desktop PCs stored their transactions on database servers running in the background.

The fast-fading alternative was a costly Unix box hooked up to terminals or PCs (using terminal emulation software). ERP transaction processing took place on the server, with the data usually being stored on the same machine.

The greatest drawbacks of these ERP systems were their cost, lack of customisation, and absence of integration. For extra functionality, you either waited for the software vendor to decide it was a profitable feature, or you hired a specialist developer to embark on a long and costly process to build it for you. Connecting to other systems - like remote branches - wasn't easy or cheap.

The growth of Web technologies changed all that. Modern browser-based ERP systems are cost-effective, readily customisable, easily integrated, and provide companies with the opportunity to offload their IT overhead to third-party providers - all for the cost of a monthly subscription fee.

It's surprising that more companies haven't taken advantage of these benefits - opting rather to continue hoarding IT hardware and software assets that threaten to become obsolete soon after they're installed.

The reason for this trend is mostly tradition. Companies feel the need to retain their data on their premises “because that's the way it's always been done”. In reality, it was done that way in the past because the technology didn't exist to do it better. Now it does - giving companies the chance to continually cut costs and improve performance.

So, how do you know if your ERP software is still stuck in to 90s? Here's a comparison to help you find out:

From the 90s - billed to death: Your bill reads like a shopping list. There's the initial cost of the software, an annual licence fee, the price for the hardware you had to upgrade, and the consulting fees for installation, implementation, and training.

Plus, because you're keeping the system on-site, you'll need an ERP administrator to oversee it. The implementation project will take at least three months to complete.

This year - pay as you go: What bill? When you signed up, you selected from a set of easy-to-understand payment plans, agreed to the terms, and created your first login. Everything you need is installed and ready for use. With a wealth of online documentation, wikis, and forums available, it's easy to implement a train-the-trainer program and have a power user bring staff up to speed. Cost to you? Nothing - it's included in your monthly subscription.

From the 90s - seats and servers: Licensing can be daunting - there are just so many choices. Should you go concurrent or per-seat user licences, or per-server/per-CPU? You bought the 64-user site licence; you only need one person on the cashbook, but you have to pay the 64-user price. How did they work that one out?

This year - per user: You pay for what your use. Sign up each user, give them access to the modules they need, and let them get to work. If you don't need a user anymore, unsubscribe them and your monthly cost drops by that amount. Dead simple.

From the 90s - the upgrade path: Your software consultant tells you that a new version is under development and it's going to give you all the business functions you sorely need. It should be included in your next annual upgrade, together with the new purchase requisition system you don't really care about.

You sigh. That company down the road has a system that already does what you want. Change to that system? It might cost millions. You'll just have to wait and see if the new version meets your expectations. But by that time, will those features already be obsolete?

This year - the upgrade's done: You log in to the app through your browser. A notice pops up about a new feature. Just the one you were looking for, too! When did that happen? The developer's blog says they've been at it for about a month since user requests hit the required volume. There was a minor bug, but they were notified on their forum immediately, solved the problem, and seamlessly redeployed within an hour. The great thing is, it will always be like this, whether it's new features, bug fixes, major updates, operating system upgrades, or hardware changes.

From the 90s - multi-instance: Keeping your system on-site is bad enough. What happens when you have multiple sites? You'll need to cover the cost and time of duplicate installations at each of your branches. And if you want to keep information synchronised between branches, you'll have to factor in the cost of implementing EDI transfers over a messaging queue.

This year - multi-tenancy: Everything is central. Set up branches in your system and you're ready to go. Users can log in from their location, select their branch, and get to work. What's more impressive is that you can set up global business rules, policies, constraints, and master data so that your entire organisation works uniformly.

From the 90s - add-ons? Sure there's provision for add-ons for your application. So why does it feel like every bit of extra functionality has to be custom written by a costly software developer?

This year - add-ons! Where did all the add-ons come from? Modular, open architectures have given developers the tools to create new functions, screens, reports - you name it. Fewer licensing constraints mean they can let their imaginations run wild without being caught out by some proprietary tripwire. Words like “App Store” or “Repository” are common where you come from.

From the 90s - ad hoc: You want your applications to talk to each other? Your consultant gives you some options - let external programs update your ERP database directly, create custom solutions using COM, CORBA or .NET, or solve all your future problems in one go: invest in an enterprise service bus. Try getting that one past your FD.

This year - in sync: If you haven't found what you need in the add-on repository, that's okay. Your application comes with a ready-to-use API that community programmers can use to pass transaction information seamlessly and securely between systems.

From the 90s - separate reporting: You don't have to worry about those standard, dot-matrix reports anymore. The software vendor just released a module that allows you to develop your own using a well-know report writer. Now you'll have WYSIWYG reports that can be viewed across the company - although you'll have to buy another system to get that functionality.

This year - seamless cross-enterprise reporting: Business intelligence is built into your ERP system, with the ability to extract information from the many data sources available, construct reports, views, dashboards, or pivots as required, and publish that information instantly to the entire organisation.

From the 90s - do as you're told: Your software vendor has months of market research behind their latest version, so they know what you need. Some specialised functions didn't quite make the list because only a few customers - like you - use them, and the return on investment didn't justify the cost of development. Oh well, there's always custom-built add-ons.

This year - do as you please: You don't just suggest features to the online community - you can even contribute to their development. And if the functionality you want is specific to only a few companies, there's either an add-on for it in the repository, or you can start a community project to build one together with like-minded members. There are few limits to what you can or cannot do.

From the 90s - user groups: You're part of the customer base. There's a user group meeting - next month. It's all being organised by the software vendor. They've drawn up an agenda and you'll get to meet other users. You met some of them at last month's event. What was that guy's name again...?

This year - social networking: You're part of the team. You've met hundreds of users online. Whether you're chatting on the product forum, commenting on the blog, discussing entries to the wiki, or becoming part of the development process, you're fully involved in the life cycle of the application.

If your ERP system is still stuck in the 90s, it's likely that you're missing out on the benefits of hosted, community-driven, Web-based ERP. You can wait for your software vendor to decide what's best for you, while you keep a tight grip on your IT systems and cover the cost of developing specialised features. Or you could take this year's model for a spin...